In 1995, a small chartering firm by the name of Arkon Shipping GmbH & Co KG was set up in Haren / Ems to offer the local German market quality and reliable fleet management services. Today its three key market segments are coastal mini-bulkers, short sea shipping and multipurpose (MPP) heavy lift vessels on routes through Europe and North Africa. With a keen awareness of the rising cost in traditional fuels, as well as their impact on the environment, the charterer is now looking at how to balance development of alternative power with the ongoing turbulence in the financial sector.
Torsten Westphal, co-founder and CEO of Arkon Shipping, tells of how the company came into existence: “I have been a chartering broker since 1981, starting my career in my hometown of Bremen before joining Leer in the 1990s. Back in the 1980s I already had contact with ship owners based in Haren (Ems) and, as they gradually acquired more ships, I saw a growing demand for chartering services. Therefore I decided in 1995 to leave Leer and found Arkon Shipping together with two local ship owners, Mr Wessels and Mr Jüngerhaus, and just ten vessels.”
Over 15 years the company has gone from strength to strength, expanding its fleet to 120 ships, its employee roster to 32 people, and its services into new regions and disciplines. Since day one Arkon Shipping has focused on European short sea shipping as the spine of its business, today responsible for a fleet of modern container and feeder vessels ranging in size between 500 and 1200 20-foot equivalent units (TEUs). This fleet is optimised for 45-foot containers and possesses the highest ice classification to enable routes even through northern Scandinavia.
“Short sea shipping is the keystone of Europe’s maritime business,” says Torsten. “Nearly two billion tonnes of goods were transported by short sea trade last year in the EU economic region. This sector, which includes the Mediterranean and Black Sea partner states, has a total coastline of 100,000 kilometres with a total of more than 5000 small, medium and large ports. Furthermore, 40 per cent of the 450 million people in the EU live in coastal regions. That is an immense figure and one of the most crucial reasons why we have made short sea shipping Arkon Shipping’s major activity.”
Arkon Shipping is also heavily involved with international bulk shipping, with a fleet of 60 mini bulk carriers between 3000 and 5000 deadweight tonnage (DWT) that visit all countries and coasts throughout Europe. Each year it is responsible for the movement of more than 3.5 million tonnes of cargo from clients that include steel factories, fertiliser manufacturers, grain and agricultural producers and other generators of raw industrial materials. The third and smallest of its business units is heavy lift cargo for which it has 20 MPP heavy lift vessels running between 800 and 12000 DWT, and cranes of up to 500 tonnes lifting capacity.
For many, the management of approximately 120 vessels at any given time could prove to be a challenge, but Arkon Shipping has implemented a number of techniques to keep the entire fleet running smoothly. Perhaps the most important of these is the employment of well-educated, competent employees that have an understanding of the sector and of the customer. Of the 30 staff behind the company, most of the key staff – including, of course, Torsten himself – have been with the company for more than a decade. In addition, it has supported the education and career progression of more than 20 apprentices that have gone on to become shipbrokers in their own right.
The other factor in the smooth running of Arkon Shipping’s business is a reliable IT system. The company has programmed it’s own software system to oversee the chartering, controlling, bookkeeping and voyage calculation carried out on a daily and long-term basis. It has been designed to allow real time data access for principle clients, fuelling transparency between companies and improving efficiency. A paperless archive was recently added to reduce environmental consumption. Arkon Shipping’s team of in-house software designers collaborated with partner Captain Petzold to establish it’s own IT company, AP Shipsoft, and sell maritime software to the wider industry.
“How we ensure such a large fleet is managed efficiently and reliably is a frequently raised question,” elaborates Torsten on why Arkon Shipping has so many vessels. “My answer is simple: the bigger, the better. The maritime sector has seen with liner shipping a concentration of businesses over the last 15 years, leading to ever-larger companies. We have seen a similar development within our clients’ structures. Huge companies have been created especially within the steel, car, fertilizer and raw materials industries.
“To meet this demand we must expand our own size too and indeed the bigger the fleet, the better it can be optimised using skilled staff and good IT systems. Not only do you gain better control over fuel bills but also you can more effectively reduce your carbon footprint. The trend to achieve this at the moment is via slow steaming, but it is also important to avoid long ballast positioning trips, and this is something that can only be reached with a big fleet. By improving net earnings and carbon footprint at the same time, you are in a position to always choose the best vessel for the intended cargo.”
Green shipping has become an increasingly important aspect of both the industry and of Arkon Shipping’s own activities. With the price of traditional fossil fuels continuing to climb over the coming years and decades, as well as international regulations requiring lesser NOx, CO2 and particulate matter (PM) emissions, there is an urgency to discover viable alternatives to diesel. Arkon Shipping thus has been considering a number of solutions: the diesel-electric motor, which is fast becoming an industry favourite; SkySails, which use kites to help reduce fuel consumption; and even Flettner rotors, a type of rotating cylinder which enjoyed brief popularity in the 1920s and 1930s and is now seeing a renaissance.
Environmental friendliness is also one of short sea shipping’s key advantages over the road haulage industry that although more polluting remains Europe’s most prevalent method of transporting goods. “We see the need for a rethink in the careless consumption of resources toward an ecological economy and a science of sustainable management,” Torsten states. “The European shipping industry is not well prepared for this development in terms of its current structure and level of equipment, but we urgently need drives toward saving energy in order to make short sea trade fit for the future.”
Business for Arkon Shipping has been turbulent at best during the last few years. Just as the grip of the financial crisis was beginning to loosen, new events such as the Arab Spring throughout North Africa and the rapidly declining economies of countries such as Greece managed to unbalance the sector once again. In combination with steadily climbing bunker prices making the operation of ships more expensive by the day, Arkon Shipping is still reeling with quarterly results lower than hoped and sees the future as unpredictable.
Nonetheless, its faith in the market and particularly in short sea shipping remains strong, seeing the pressures being exerted from without – from the financial crisis and political turmoil – and from not within, such as by an oversaturation of newbuilds. This means there is still scope for Arkon Shipping to improve its business. Green shipping is one important method of achieving this and it is now seeking capital to expand its fleet with brand new eco-friendly designs that will stand it in better stead against road haulage.
Despite the obstacles faced, Torsten and Arkon Shipping remain characteristically optimistic about the future. “We intend to grow our ships and services in order to be an ever more attractive partner to the industry,” Torsten says in closing. “Short sea shipping in particularly has always been a successful story all the way back to the Hanseatic Era and still has a bright future. There are millions of tonnes to be shipped by sea and we want to take on that challenge.”
Concentrating on the future of green shipping
Efficient fleet management methods
Wide variety of ship types and possible services